Kabbage’s Offerings
One such company offering working capital loans to small online businesses is Atlanta-based Kabbage. Kabbage was founded in 2008 by Kathryn Petralia, Rob Frohweins, and Marc Gorlin whom I had interviewed a few years ago. They pioneered the financial services data and technology platform to provide funding to small businesses almost instantly. Unlike the traditional banks and moneylenders which rely on detailed financial business models, credit scores, and paperwork, Kabbage takes into account data generated through business activity including seller channels, social media, and shipping data to analyze business performance. Kabbage does not call itself a lender, but a provider of merchant cash and working capital advances.

Based on these parameters, businesses can secure approved credit lines ranging from $500 to $100,000 within 7 minutes of the application process. Businesses can then borrow any amount once a day and pay interest on these borrowed amounts at borrowing fees that ranges from 1%-13.5% for the first 2 months followed by 1% for the rest of the period. Loans are instantly available with the organization’s accounts such as PayPal accounts for periods up to 6 months with no fees for early repayment. Kabbage has also adopted the mobile world and now offers iOS- and Android-based apps that lets users borrow funds on the go.

Kabbage’s detailed financials are not known, but market reports suggest that the company was operating at an annual revenue rate of $17 million last year, recording growth of 140% over the year. Kabbage has been funding operations through venture funds and debts. They have raised $465.4 million in funds with nearly $362 million from Guggenheim Securities, Thomvest Ventures, Victory Park Capital, and Western Technology Investment. Their venture funding has come from Mohr Davidow Ventures, BlueRun Ventures, Thomvest Ventures, UPS Strategic Enterprise Fund, Lumia Capital, The TCW Group, SoftBank Capital, David Bonderman, Warren Stephens, SV Angel, and Jim McKelvey. Their latest round of funding was held in May this year when they raised $50 million in a round led by SoftBank Capital at an undisclosed valuation. In April this year, Kabbage had also raised $270 million in debt from undisclosed investors.